Saudi central bank may raise loan-to-deposit ratio

DUBAI / Reuters

Saudi Arabia’s central bank may raise the maximum loan-to-deposit ratio for commercial banks if that is needed to help the economy, central bank governor Ahmed al-Kholifey told Al Arabiya television.
Kholifey was speaking on the sidelines of meetings of the IMF and the World Bank in Washington. The central bank last raised the ratio in February 2016, to 90 percent from 85 percent.
The ratio for the banking sector as a whole stood at 81.7% in August, down from 84.8% a year ago, according to the latest central bank data.
Kholifey also noted that the non-oil sector of the economy grew 0.6 percent from a year earlier in the first half of this year, which he said suggested the non-oil sector would lead economic expansion. Saudi banks have passed stress tests and are not worried about bad loans, he added.
Earlier this year, Alawwal Bank entered talks to merge with Saudi British Bank, partly owned by HSBC . Kholifey told Al Arabiya that the situation with the possible merger would be clear by the end of this year. He also said two regional banks and one Asian bank were in advanced stages of procedures to obtain Saudi banking licences.